Canada’s Moore Says BlackBerry Must Revive by Itself

Aug. 21 (Bloomberg) -- Canadian Industry Minister James
Moore said it’s up to BlackBerry Ltd. to pull off a turnaround
on its own, signaling the government has no plans to intervene
in the struggling smartphone maker’s future.

“This is a Canadian company with a long track record of
stirring up innovation and important changes in the products we
all use,” Moore said today in an interview in his Ottawa
office. “They employ a great number of Canadians. It’s been a
source of Canadian pride and we hope that they do well.”

Moore, who was appointed industry minister last month, said
the company is having a “hard time” with its new line of
smartphones.

“It hasn’t gone off with the success that they hoped that
it would, and it’s for them to engage the market and provide
devices and services, platforms, content that the market will
receive well,” he said.

Moore’s comments come after shares of the Waterloo,
Ontario-based company jumped on Aug. 12, when BlackBerry
announced plans to form a board committee to consider a
potential sale, as well as joint ventures and partnerships.

The announcement built on a move last year when BlackBerry
hired JPMorgan Chase & Co. and RBC Capital Markets to advise the
company on strategic alternatives. At the time, Chief Executive
Officer Thorsten Heins said a sale wasn’t the “main direction”
he was considering. The company’s outlook has worsened since
then, with the revamped BlackBerry 10 seeing lackluster demand.

Turnaround Plans

Prem Watsa, a Toronto businessman and BlackBerry’s largest
shareholder, said Aug. 12 he would step down from the company’s
board, raising the possibility he may play a role in rescuing
the company.

Some of Canada’s biggest pension funds, including Canada
Pension Plan Investment Board, have expressed interest in
financing a deal to take the company private if approached.

Prime Minister Stephen Harper’s government, while declining
to comment on any specific takeover possibilities, had
previously signaled it would prefer the company remain Canadian.
The government automatically reviews all foreign takeovers of
companies with assets valued at more than C$344 million ($329
million) to determine if they’re in the national interest.

“When you have a national champion like BlackBerry, you
hope they remain a national champion,” former industry minister
Christian Paradis, Moore’s predecessor, said in a March 27
interview in Ottawa.

Shares Dropped

BlackBerry dropped 2.5 percent to C$10.73 in Toronto
trading, for a market value of C$5.6 billion. The stock has
fallen 9 percent this year.

BlackBerry’s dimming prospects as an independent company
pose a challenge to Harper’s government, which has intervened to
protect troubled companies in the past. Canada agreed to invest
$9.5 billion, along with the Ontario government, in General
Motors Co. as part of the automaker’s 2009 bailout.

BlackBerry is Canada’s biggest publicly traded corporate
spender in the country on research and development, according to
data compiled by Bloomberg.

A sale could help BlackBerry avoid the fate of another
former star of the Canadian technology industry: Nortel Networks
Corp. That company, which was once North America’s largest
telephone-equipment maker, filed for bankruptcy in January 2009
before being broken up and sold at auction to foreign buyers.

‘Global Players’

In a Jan. 22 interview, Paradis said the government hopes
companies such as BlackBerry “grow up organically to become
global players.”

While Beijing-based Lenovo Group Ltd. has shown interest in
acquiring BlackBerry, Harper’s government could scuttle such a
deal on national security grounds because BlackBerry is used by
many government institutions and corporations, according to Ian
Lee, assistant professor at Carleton University’s Sprott School
of Business in Ottawa.

‘The only interference I would see is if a Chinese company,
whether a government or private corporation, tries to buy it,’’
said Lee, who has attended economic retreats organized by
Finance Minister Jim Flaherty, in an Aug. 12 phone interview.
“They would block it.”

Security Concerns

The government weighed new regulations on foreign wireless
suppliers amid concern over the networking equipment provided by
Huawei Technologies Co. to carriers such as BCE Inc. and Telus
Corp., a person familiar with the matter told Bloomberg in
March.

The government last year approved Cnooc Ltd.’s $15.1
billion takeover of Calgary-based energy producer Nexen Inc. At
the same time, the government said state-owned firms would only
be allowed to buy businesses in Canada’s oil sands under
“exceptional circumstances.”

Flaherty said in January the government would “look
carefully” at a bid for BlackBerry by Lenovo.

Moore said he didn’t want to speculate on any specific
takeover scenarios for BlackBerry. The government evaluates
takeovers on a case-by-case basis, he said.